Silicon Valley has long had a reputation for being the world's
technology capital but an increasing number of cities in Europe
are starting to give the Californian tech cluster a run for its
money, according to a report from venture capital firm Atomico
and event organiser Slush.

Deep technology companies — generally considered to be businesses
that are focusing on developing new intellectual property (IP) —
are thriving across the continent and not just in the traditional
technology hubs of London, Berlin, and Stockholm, the "State of European Tech
Report" found.

Published on Wednesday for the second year running, the report
suggests that Munich, Zurich, Lisbon, Madrid, and Copenhagen will
be cities to watch over the coming years.

Tom Wehmeier, principal and head of research at Atomico, told
Business Insider: "We believe the future of technology is
happening here in Europe. Increasingly some of the most important
services with billions of users are being created and built here
from Europe."

The report, which draws on a number of sources and covers a five
year and nine month period starting in 2011, highlights the
successes of dozens of European tech companies.

Produced by two companies who have a vested interest in
championing the European tech scene, the report refers to
independent companies like Spotify and King, while also
mentioning some of the businesses that have been acquired by tech
giants, such as ARM, which was acquired by Japan's SoftBank for $32 billion (£27
billion) in June, and NXP Semiconductors, which was sold to Silicon Valley chipmaker Qualcomm for $47
billion (£38 billion) in October.

Amazon, Apple, Google, Microsoft, and Facebook — the top five US
tech titans — have acquired 52 European tech companies since
2011, according to the report. 36 of those acquisitions have been
made since January 1 2014, meaning there was roughly one deal per
month on average to September 2016.

Deep tech companies include those working on AI, machine
learning, speech recognition, data mining, big data, deep
learning, natural language processing, and computer vision. It
also includes virtual reality and augmented reality startups, as
well as those working on new hardware for drones, robotics,
radar, 3D printing, nanosatellites, and space. Wearables, smart
home, and smart city startups also fit the bill.

While Europe is producing an increasing number of deep tech
companies, they're not being backed with as much capital as their
rivals in the US, according to the report.

Europe's deep tech companies have received $2.3 billion (£1.8
billion) since the start of 2015, the report claims, adding that
over $1 billion (£800 million) should have flowed into Europe's
deep tech firms by the end of 2016.

Atomico

Deep tech companies in the UK have raised more than deep tech
companies in any other European country, according to the report.
Some $1.3 billion (£1 billion) has been invested into the UK's
deep tech companies, compared to just $582 million (£465 million)
in France and $480 million (£384 million) in Germany.

Siraj Khaliq, a partner on the investment team at Atomico, said
that Europe's tech scene has changed considerably since the 1990s
when he left for the Valley. He believes that today, Europe's
tech scene is not only keeping up with Silicon Valley but that it
is also excelling it in some areas, particularly artificial
intelligence.

Khaliq, a Brit who built his own one $1 billion dollar farming
software business in California, called The Climate Corp, said
that Europe has always been "good at the academics" but
commercialising has never been one of our strong points.

The Cambridge computer science graduate added that many of his
classmates simply went into investment banking or hedge funds
when they finished studying because they could earn £150,000 to
£200,000, as well as a large bonus.

However, now they're increasingly looking to start their own
company. Khaliq thinks people's ambitions have changed over the
last couple of decades and so has the support network in Europe
for entrepreneurs.